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4. Define income elasticity of demand. a. Give an example of a good that has a negative income elasticity and one that has a positive income elasticity and explain why.

4. Define income elasticity of demand. a. Give an example of a good that has a negative income elasticity and one that has a positive income elasticity and explain why.

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
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4. Define income elasticity of demand. a. Give an example of a good that has a negative income elasticity and one that has a positive income elasticity and explain why. 5. What typically causes the price elasticity of supply to be high or low? 6. What is total revenue and how do you calculate it? a. When price drops and the quantity of demand increases, there are two reasons that revenue changes. Some goods are now produced that weren't previously produced and those goods that were produced before, are now being sold at a lower price. How do you know if revenue will go up or down?
Transcribed Image Text:4. Define income elasticity of demand. a. Give an example of a good that has a negative income elasticity and one that has a positive income elasticity and explain why. 5. What typically causes the price elasticity of supply to be high or low? 6. What is total revenue and how do you calculate it? a. When price drops and the quantity of demand increases, there are two reasons that revenue changes. Some goods are now produced that weren't previously produced and those goods that were produced before, are now being sold at a lower price. How do you know if revenue will go up or down?
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